Fixed or Variable? A Richmond Hill Buyer's Guide to Mortgages Ahead of the October 28 Bank of Canada Decision

In six days, the Bank of Canada will make its October 28 rate decision — and for anyone buying a home in Richmond Hill or renewing a mortgage this fall, the fixed-versus-variable question has rarely mattered more.

Here's the lay of the land, with numbers you can verify. The Bank's policy rate sits at 2.25%, where it has held at every 2026 decision. September inflation came in at 3.1% — above the Bank's 2% target — and on October 20, Reuters reported that traders were pricing in roughly an 85% chance of a quarter-point hike to 2.50% at this meeting. Some major banks, including Scotiabank, UBS, and Manulife, have publicly moved their forecasts to call for an October increase. Others, including Desjardins and Capital Economics, still expect a hold. It is genuinely a close call, and the market's 85% is a bet, not a promise.

Where mortgage rates stand right now

Two separate machines set your mortgage rate, and it helps to keep them apart.

Variable rates follow the Bank of Canada. The Big Six prime rate is 4.45% today, and your variable rate is prime minus your lender's discount. The best 5-year variable rates this week are around 3.25% for a strong insured file.

Fixed rates follow the bond market, not the Bank. The 5-year Government of Canada bond yield is around 3.54–3.62%, which has already pushed the best 5-year fixed rates to roughly 4.34% — even though the Bank hasn't moved all year. Bond traders moved first, pricing in the possibility of hikes before the Bank ever acts.

That spread — variable about a full percentage point cheaper than fixed — is exactly what makes the choice difficult right now.

What would a hike actually do to you?

If the Bank raises its rate by a quarter point on October 28, lenders typically move prime the next day. For a variable-rate holder with adjustable payments, the math is straightforward: on a $500,000 mortgage with 25 years remaining, a jump from 4.05% to 4.30% would add roughly $68 a month to the payment. On $750,000, it would be about $103 a month. If your payment is fixed and only the amortization adjusts, more of each payment would go to interest instead.

If you hold a fixed rate, a decision changes nothing for you that day — your payment is locked. But the bond market may still nudge fixed rates higher if the decision reshapes expectations for future hikes.

How to choose: four honest questions

1. Could your budget survive a one-point rise? This is the simplest test mortgage professionals use. If an extra point on your rate would stretch you thin, the certainty of fixed is usually worth the premium. If you have room to absorb moves, variable's lower starting rate can pay off.

2. Might you sell or refinance early? Variable mortgages typically carry much lower prepayment penalties than fixed ones. If there's a real chance you'll move within your term — a growing family eyeing a bigger Richmond Hill home, a relocation on the horizon — that flexibility has real value.

3. How do you sleep? This sounds soft, but it isn't. Borrowers who check rate headlines with dread do better on fixed, even when variable looks cheaper on paper. A mortgage you don't think about is a feature.

4. What does your time horizon say? Economists broadly agree the next move in the cycle is up, not down — the debate is only about when. If you lean toward the hawkish view, locking a fixed rate now means you won't pay more later if the bond market keeps climbing. If you expect rates to hold through year-end, variable lets you stay cheaper while you wait.

Three moves to make before October 28

Get a rate hold. Lenders typically offer free rate holds for 60 to 120 days on purchases and renewals, and many will honour a lower rate if one appears before your deal closes. A hold costs nothing and caps your downside.

Shop your renewal. Your lender's renewal letter is a starting point, not an offer. Compare it against at least one other lender or a broker before signing — and never let a mortgage auto-renew without reviewing it.

Run the numbers on your real balance. General rate charts are helpful; your own balance, amortization, and discount are what matter. A quick conversation with a mortgage professional before the decision date puts you in a position of choice, not reaction.

The bottom line

Six days from now, the Bank of Canada will either confirm what the bond market already believes or surprise it. You can't control that decision — but you can control whether you're prepared for either outcome. The right mortgage isn't the one that wins the rate race on paper; it's the one that fits your budget, your plans, and your comfort with risk.

Thinking about buying in Richmond Hill, York Region, or anywhere in the GTA — or renewing this fall? Contact M2Team for a free home evaluation and a plain-English walkthrough of what today's rate environment means for your purchase. Call Mehdi Teimouri, Broker at Right At Home Realty, at 647-989-2641.